For Keira Azzopardi and her fiancé, Stephen Monus, the experience of house hunting in Toronto has been a mixed bag of hope, excitement and stress.
The couple, both in their early 30s, have been looking since last summer. They have put in offers on five houses but were outbid each time, sometimes to the tune of $200,000 to $350,000 over asking.
“Even though we’ve been looking at places for a long time and are aware that some of the neighbourhoods we look at come with a bit of a premium, sometimes we still get blown away by what the house ends up selling for,” said Azzopardi. “
Even our realtor
has been shocked in a few instances.”
This spring, amid a
real estate market
that is seeing dropping prices, slowing sales and more choice with properties sitting on the market longer in many parts of the country, it would seem that
first-time buyers
have their best chance in years to step onto the first rung of the property ladder.
But even with the introduction of the First Home Savings Account and the First-time home buyers’ GST/HST rebate on new homes valued up to $1 million, a higher Home Buyers’ Plan withdrawal limit and provincial incentives, realtors and brokers across Canada describe the mood among first-time buyers such as Azzopardi and Monus as cautious.
“I find that buyers are more hesitant to compete than they were,” said Tanya Colbo, a real estate agent at Royal LePage Atlantic in Halifax. “I think they’ve been hearing these stories about 2021 and competing like crazy. Some people felt like they overpaid for homes, and then the people who want to sell now are stuck because the market has settled a bit.”
Still, slowing sales and cooling prices have created an environment where first-time buyers have more leverage in negotiations and conditions such as home inspections.
“It really makes a huge difference because they get a chance to take a look at what’s on the market and have time to think and do their due diligence, which for a very long time didn’t exist in our marketplace,” said Rhiannon Foster, a Vancouver-based realtor at Century 21 In Town Realty.
Home prices
are just one component of the high cost of living weighing on many Canadians, said Kori Marin, co-founder and broker at Fox Marin Associates in Toronto.
“I don’t think it just comes down to housing anymore. I think it comes down to your entire life circumstances,” said Marin. “Going to the grocery store is insane. Going out for dinner is astronomical. Every time you pay for something, (such as) property taxes, land transfer taxes, you’re just getting dinged left, right and centre.”
A combination of changing priorities and being priced out of the market means the profile of first-time buyers is skewing older, said Ralph Fox, co-founder and broker of record at Fox Marin. He said there has been a “great reckoning” of people looking for more flexibility in their lifestyles questioning the traditional path of
being anchored to a mortgage
at a young age.
“We’re seeing a lot of people with very strong incomes, young people earning $200,000 or $300,000 a year, electing to rent,” said Fox. “That’s something we typically wouldn’t have seen a few years ago, and it’s something that’s becoming more part of the conversation that never really existed up until this recent downturn.”
Many real estate professionals
said saving up a down payment is the biggest hurdle for first-time
homebuyers
. Financial support from the so-called “Bank of Mom and Dad” is more prevalent than ever, particularly in expensive markets.
“I don’t think that’s going away,” said realtor Steve Saretsky, owner of The Saretsky Group in Vancouver. He estimates about 90 per cent of the buyers he works with have financial support. “Even if prices correct 10 per cent or 15 per cent from here, which would be about 30 per cent below the peak, I still think you’re looking at the inability to save the down payment as the biggest challenge.”
For Julia Coffin and her husband, Eric, the down payment is the biggest barrier to future homeownership. The couple currently rents a house in Whitby, Ont., but hopes to buy their own place within the next few years.
Coffin says she and her husband want a space to make their own and to invest in a “legacy” for their two young sons. But the cost of groceries, gas and other necessities for a family of four makes it hard to save money.
“How can you come up with $100,000 when you have a young family and you have debt? Trying to figure out a plan … has been difficult as well,” she said.
Over the next year or two, Coffin said their plan is to reorganize their budget to focus on paying off student debt and building their savings before talking to a realtor or mortgage broker to evaluate their options.
“We need strict financial planning and maybe a lucky windfall,” said Coffin.
As president of the Canadian Mortgage Brokers Association of Ontario, Michelle Campbell says a “consistent theme” that she hears directly from brokers across the province is the desire is there but the full cost of getting into the market is overwhelming for first-time buyers when they factor in the down payment, closing costs and provincial land transfer tax.
Instead of trying to time the market, Campbell said she tells first-time buyers to focus on what they can control.
“What matters more is understanding your budget, getting pre-approved and making sure you’re comfortable with the monthly payment, not just the purchase price,” said Campbell, a licensed mortgage broker with Mortgage Architects – A Better Way Mortgage Group in Mississauga, Ont. “I’m also encouraging buyers to think long-term. If the home works for them for the next five to 10 years, short-term market fluctuations become a lot less important.”
Even with concerns about the cost of living and wider economic uncertainty, many determined first-time buyers are forging ahead.
In Toronto, Azzopardi and Monus are continuing to search for the home they hope to live in for at least the next 10 years, but they aren’t in a rush to leave their rental apartment until they find the right property.
“It’s a balancing act between trying to find something that’s affordable and also something that we can grow into,” said Azzopardi.
But the allure of home ownership remains powerful.
“It would be nice to get a home and find a place that’s ours,” said Monus. “It’s all about building those roots and stability and having a space for ourselves.”
• Email: jswitzer@postmedia.com
Spring is traditionally the busiest time for real estate and this year, the stakes couldn’t be higher. Follow our Spring Real Estate Survival Guide series as we unpack some of the most pressing questions buyers and sellers are grappling with, plus expert advice on how to navigate the reality of a slower market.
Read more from our Spring Real Estate Survival Guide
- Why timing the bottom of Canada’s roller-coaster real estate market may be harder than you think
- Buying in a bear market: These dealmaking tips could save house hunters a bundle this spring (for subscribers)
- The Great Correction: Not even Wayne Gretzky’s hometown could escape the crash of the ‘exurbs’
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